How to Double Your Salary by Leaving Goldman?
One of the most natural and lucrative career path for analysts at investment banks is to jump to private equity firms after spending two years working like a dog on Wall Street.
The most visible benefit after making this jump is to see annual income double. A second-year analyst at Goldman's IBS probably makes $150K a year, including bonus. After moving to a big private equity firm, the third year total income will increase to $300K.
Compared to Wall Street firms, traditionally known as sell-side and currently under tremendous regulatory pressure and scrutiny, private equity firms, aka buy-side, are growing very fast in recent years, raising big funds and expanding their business reach.
Thanks to the money under management, which is increasing rapidly, private equity firms have enormous and steady management fee income. They need to hire more people to help their existing and expanding business lines and they enjoy the benefits of big fee income to afford throwing money around to attract young talent. And they just LOVE hiring directly from big name sell-side firms like Goldman and Morgan Stanley.
Getting analysts from Wall Street not only assures quality - most of them were hired out of top schools in the U.S. to start with - but also foregoes the need for training. Working on Wall Street for two years is the best finance-related training you can ask for from anyone, not just the efficiency of doing valuation work but also the ethics of hard work, period!
But things are getting trickier these days. Before, just like campus recruiting in the senior year when job offers are doled out no more than half a year before the actual work starts, private equity firms will interview and give out offers 6 months before analysts' two-year apprenticeship on Wall Street is completed.
Recently, under competitive pressure to lock in talent as early as possible, private equity firms, either directly or through recruiting firms, are interviewing Wall Street analysts 18 months in advance. So analysts, who started only half year ago on Wall Street, are being asked to come to secret interviews, resulting in many analysts having to sneak around and even miss work.
"You maybe called into an interview two days in advance, a day in advance or even an hour in advance," confessed by some of those analysts who had to weigh the lucrative benefits 18 months down the road with the constant danger of lying to their bosses and colleagues and worst of all, getting temporarily sloppy with their work.
And Wall Street is VERY pissed off. Goldman Sachs has made it very clear that they would let go anyone who accepts an offer from a private equity firm even if the offer is for a job that starts in 18 months. So what are the analysts counter-strike? They lie to their bosses in their faces even after being pulled into a conference room and asked point-blank by their superiors.
One thing is quite clear here. Wall Street is no longer as appealing to young and bright students as they used to be. Many students from top schools still want to get into investment banks but they also have their second job planned out: work their butt off for two years and move to a private equity firm for more money and better life-style.
In a nutshell, IBS programs at Goldman and Morgan are fast becoming training programs for new funds at the likes of Blackstone and KKR. Tides have turned on Wall Street and the new masters of universe belong to the private equity shops!
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